Thoughts on recent Ninth Circuit and California appellate cases from Professor Shaun Martin at the University of San Diego School of Law.

Wednesday, May 14, 2014

People v. Acosta (Cal. Ct. App. - May 12, 2014)

It's a testament to the depths to which we sunk during the housing bubble (and its aftermath) that in the 91 years since California enacted the relevant provisions of Section 502.5 of the California Penal Code Section, there wasn't a single appellate decision that reviewed a conviction thereunder for wilfully removing fixed improvements from a piece of encumbered (e.g., mortgaged) real estate.

The case involves precisely the type of abhorrent conduct that transpired -- and, to a degree, continues to transpire -- during the housing crash. Conrad and Monique Acosta were a married couple who took out a $700,000 mortgage when they refinanced their absolutely beautiful home in San Diego. It was a stunner. Stone work, wood gate, courtyard, patio, fireplace, swimming pool with waterfall and spa, exterior shower, custom wet bar with built-in wine racks; in short, all the trimmings.

Three years later, the Acostas stopped paying their mortgage. So the lender went to foreclose. At which point Mrrs. Acosta demanded money in order to vacate the premises. Going so far as to e-mail the lender and say: "$10,000 plus will maybe get me and my aunt to move out of this home in good condition!!!" You can certainly read that as chutzpah. As well as an implicit threat.

When the lender refused to give the Acostas the demanded ten thousand dollars to "maybe" vacate the premises, they deliberately destroyed the property. Mrs. Acosta cut down a tree in the back yard and pushed it into the swimming pool. She put black dye on the master bedroom grout. The Acostas pulled up plants in the back yard. Mr. Acosta took a sledgehammer to iron posts on the staircase. The hot tub suffered a similar fate: sledgehammered to oblivion. The kitchen lost its cabinet doors, drawers, countertops and appliances. Half of the rock facing on the house disappeared. Ditto for the garage door. When the lender finally arrived, there was "total destruction". Every appliance was gone, every plumbing pipe was broken, every outlet was smashed in, the pool was destroyed, etc.

At which point the lender called the police. The Acostas denied injuring the property and feigned surprise at the damage and theft. But the police searched some storage units rented by the Acostas and found numerous items missing from the property. Plus there were the couple of Craigslist ads that had air conditioning units (which were missing from the property) listed for sale. With Mr. Acosta's phone number on them.

Not surprisingly, the lender took a bath. They could only sell the "destroyed" $700,000-plus property "as is". For less than $179,000.

Did I mention that both Mr. and Mrs. Acosta were real estate agents? Yep. They were. Both of 'em had their license.